UPDATE #1 - and SPECIAL NOTE: IMPORTANT: Clearing and Bookkeeping Processing for New OTC Account Class - Effective Monday, September 13, 2010

UPDATE #1 – and SPECIAL NOTE:

The only products affected are products that are currently treated as 30.7 Secured.  Nothing is moving out of Customer Seg (ie, the futures account class).   All standard CME-cleared futures and options, and all other products currently covered by a 4d order, remain as part of standard customer segregation.

The set of affected products at this time are:

• NYMEX wet freight forwards – product codes FB9, FC2, FC4, FC5, FC6, FDD, FPA, FT3, FT5, FT7

·         COMEX OTC London gold forwards – product code GB

·         CME S&P-GSCI Excess Return forwards and swaps – product codes ERF, GCO, GDI, SE2, SE3, SES

·         CBOT DJ-UBSCI Excess Return forwards and swaps – product codes DG2, DG3, DGS

·         CME-cleared CDS contracts

 On May 6, 2010, the U.S. Commodity Futures Trading Commission put into effect new Part 190 regulations that created a new customer account class for “cleared OTC derivatives” (as defined in new CFTC Regulation 190.01(oo)).  As stated in the CFTC adopting release for these new regulations, “a position in an OTC derivative (and relevant collateral) that a customer clears through an FCM with a DCO, which position (and relevant collateral) is not subject to a Section 4d Order, would be considered part of the cleared OTC derivative account class, as soon as, but only after, a DCO rule … that requires such positions (and relevant collateral) to be held in a separate account for cleared OTC derivatives becomes effective ….”  

On Monday September 13, 2010, subject to Clearing House Risk Committee and other approvals, CME rules requiring customer “cleared OTC derivatives” to be held in a separate account will become effective.  On that date, existing customer positions and collateral currently in the 30.7 Secured Account will be transferred to the new Cleared OTC Customer Account.

So for example, currently customer positions in the new NYMEX wet freight forward contracts are maintained in the 30.7 Secured Account.  As of September 13, 2010, they will be maintained in the Cleared OTC Customer Account.

For more information, please contact CME Clearing at 312-930-3170.

For full text of this advisory, please click here: